UK tax on a Scottish local tax?

In a joint letter to the Scottish Government and HMRC the CIOT and ICAS outline a number of points to consider in relation to the potential VAT treatment of the Scottish Visitor Levy which is expected to be introduced locally from around mid-2026 onwards. Actual implementation of the levy is down to local authorities following public consultation. For example the City of Edinburgh Council is to introduce its levy from 24 July 2026.

The current expectation is that UK VAT will be due on the levy where accommodation providers are VAT registered which as the professional bodies note is ‘essentially a UK tax applied to a Scottish local tax’. Visit Scotland guidance (from October 2024) also suggests that the levy will be included in turnover for the purposes of determining whether a business needs to register for VAT. The institutes question whether charging VAT...